Successful entrepreneurs in China will tell you that success took longer than they had originally planned. Ex-pat owners of businesses in China who have been slugging away for 5+ years can suddenly find themselves on a steep growth curve. Many of these ‘overnight success stories’ that were years in the making end up leaving their owners hostages to the business. The founders are cash-poor while the business gets bigger and richer.

What can successful China entrepreneurs do to boost their household finances without destroying the company balance sheet?

Over the years you’ve tweaked the business model, found the right marketing & sales mix and were ready when demand caught up with your offering. What happens when your 5 year old business becomes an overnight success?

1) A sudden uptick in business activity may leave you with lots of money and lots of spare time. Probably not, though. It’s more likely that you’ll find yourself in a period of hyper-growth and hypo-cashflow. Don’t panic. Most small businesses grow at an uneven pace – particularly in China. Be prepared for a significant lag between higher sales and higher retained earnings.

2) Asset rich – household poor. Entrepreneurs are notorious for putting everything they have into their business – and that’s great. But as the business grows you will need a plan for transferring some wealth from the company accounts to your own portfolio.

3) Your business is not an ATM. Pay yourself a predictable salary. Big annual bonuses are fine – as long as you have some sense of how much you are earning. Someone bootstrapping a brand-new business probably doesn’t have a clear idea of how much he will earn in 2008 – but if you’ve been around for a few years and have a steady flow of business, you should be able to give a ballpark estimate of how much you’ll pay yourself.

4) IPOs and M&A grab the headlines, but successful entrepreneurs need a Plan B for cashing out. Leaving ALL your assets in the company can be risky. China business is famous for stories of successful entrepreneurs who ended up running into trouble with partners, bureaucrats, suppliers, key clients – and changes in regulations. Make sure you have a cushion in case the business suffers a major shock.

5) Incremental cash-out options. While living off your expense account is a bad idea, retiring on the company may be a winning strategy. Entrepreneurs and owners should consider setting up in-house pension plans, education funds and health insurance programs that preserve your business’ capital structure but still provide for the owners’ long-term financial health.

For more ideas about incremental business cash-outs, take a look at www.ChinaFinancialPlanning.com.

The New Year is upon us. Happy Year of the Rat. Now let’s all get settled back in and back to work, thank you. The commission-earning segment of the Chinese economy is ready to get back to business.

In the world of Academia it’s the start of a different kind of year. A new semester is beginning – bringing a new class of international scholars to learn about the joys of China.

Welcome NYU Spring 2008 interns. Don’t worry. It gets warmer.

A couple of fresh-faced interns running around your shop can be a great morale booster. They’re young, clever and amusing as hell – if they’re happy. And they can generally be counted on to do a lot of the more mundane, monotonous and awkward tasks.

Unless you’re in the fashion industry, you can pretty much forget about sending them out for coffee and running errands. You can both do better. It all comes down to finding the right jobs to delegate to them - but that can be tricky. Aim too high and you’re sure to end up disappointed. Aim too low and they’ll lose interest and drift off.

5 Rules for a positive intern experience.

1) Projects are good — especially those involving research. I like having them help with things like competitive analysis and collecting data on potential new markets. Make the projects chunky – break them down into 2 or 3 week segments. You might be surprised at the quality of their work.

2) Explain the big picture. Teach them about your industry – and China business. They are here to learn and they may be very into hearing what you have to say. Or then again, they may not. If your firm has a standard orientation presentation, then by all means use it.

3) Keep expectations reasonable. Yes, they have high IQs. And I agree that they really are sharp as tacks. But they have absolutely no experience. They’re like 20 years old or something. They don’t want responsibility, and you don’t want to give it to them.

4) Interns love marketing. It’s immediate and quick and exciting. They get to go online a lot — and that’s what they do and how they live. If you need any market research or data collected, this is your chance. They’re also great at updating PPTs, orientation & sales presentations and anything else media related. And they make great impromptu focus groups or for on-the-street-pollers.

5) Their schedules are likely to be very flexible. Extremely flexible. They have homework and field trips. Plan accordingly.

Just before Chinese New Year, I was in a Shanghai sales meeting where the owner of a European company was discussing post-holiday sales projections. The talk was all “new, innovative, out of the box”, but the walk was all about doing the same old thing only bigger and/or cheaper. I’ve been to this rodeo before. Some of the expensive new marketing initiatives put into place 6 months ago were about to whither and die.

If you are a straight-arrow manager trying some “out of the box” thinking in China you are going to need a strategy for gauging and recognizing success in the early stages. Most of all you need to avoid squandering your investment by pulling the plug too early.

Here are some ideas that might help:

I’m not one of those “innovate or die” guys. I like figuring out what works and doing it more - better, cheaper - faster. Sometimes that means reinventing and cleaning house. Sometimes it means refining and removing bottlenecks.

But let’s assume you went off and tried something new. A compensation plan. An advertising campaign. An operating structure. A product. A brand. You get the idea.

5 innovative ideas for 1,000,000 bottom-line managers:

Out-of-the-box thinking is expensive, risky and uneven. You have to manage and budget accordingly. Top managers aren’t going to innovate and develop new operating procedures on their lunch hour or weekends. It’s an investment. That means risk and return. You have to strike a rational balance and live with the choices you make. Innovation ain’t for wussies.

People resent the barrier-breaker and will try to make his efforts fail. First, make sure that YOU are not this guy. (Lot’s of interesting ideas get squashed on impulse by managers JUST LIKE YOU.) Then, prepare to intervene and use the force of your soft power as well as policy to give your innovation time to work. Informal support is almost as important as budget and manpower.

Exceptions have to made – budgeting, expenses, quotas, standard operating procedures. This is messy, and can definitely lead to resentment and internal combat — especially when one team is following a different business model. Hard-ass managers hate exceptions. Tough. If you don’t get messy, you’ll never build anything new.

Scheduling has to be flexible. Similar to #3, but oh, so much more difficult. China is notorious for scheduling and timeline nightmares. It always seems that 3 wheels are ripping at the pavement while one is stuck in reverse. I’ve tried yelling, “Just fix it!” in a variety of tones, volumes and speed. Doesn’t work. Also, beware of calling a job finished at the 75% mark. If you take your eyes off the ball too soon you might have problems.

It needs to be ramped up if it works. This can be the trickiest part. Let’s say your new sales approach or product development is a success. Now what? Some of you are in industries that demand constant change – but others of us tend to get paid well for doing what works well. It’s that second group that needs this last warning: if ANY new innovation works, it’s just a matter of time before it becomes industry standard. If you figured something out early then that’s a competitive advantage. If you react too late – that’s a competitive weakness. Have a plan for success.